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Europe whacks industry, blesses capture caper

De-industrialisation: It's full speed ahead

Power generation, construction, coal and aluminum are the biggest losers after a day of votes by the European Parliament's environment committee yesterday. The winners on "Super Tuesday", as it was dubbed, will be investors in carbon capture and storage (CCS) technology and Russia.

The committee was staking out a position on the next phase of the EU's carbon emissions trading scheme, which began in 2003. ETS involves sucking some €30bn out of industry by mandating that manufacturing and power generators must bid for permits. Most permits are now free, but the committee voted to force power plants into full auctioning from 2013. The goal is to enforce full auctioning across all parts of the economy (or what's left of it) by 2020. The committee's votes inform the EU's negotiating position in global climate negotiations.

In the run up to the vote, coal-rich Poland rallied support from new EU members (Hungary, Slovakia, Bulgaria and Romania) to soften the blow by phasing in full auctioning. Polish miners also marched on Brussels. In the end, the 'Visegrad Group' failed to win the vote. So much for energy independence, then: Poland generates most of its power from home-mined coal, but will be dependent on Russian gas in the next decade.

"Europe will export jobs and import energy-intensive products, with no environmental gain," said Patrick de Schrynmakers, secretary general of the European Aluminium Association (EAA).

However the EU will be able to fine member states which fail to meet their national targets, at the rate of €100 for every extra tonne of CO2 emitted.

The committee wants power plants to capture and store CO2 underground, using carbon capture and storage techniques which are still at the demo stage and won't be viable until at least 2030, according (pdf) to consultants McKinsey. Nevertheless, the MEPs voted to invest €10bn in CCS.

Italy and Germany have balked at the policy, with Chancellor Merkel peeling off her green bumper stickers to fight the de-industrialisation policy.

Merkel "could not support the destruction of German jobs through an ill-advised climate policy", she said last month. ®